Signaling Theory Evolving: Signals and Signs of Trustworthiness in Social Exchange

Signaling theory is concerned with situations of strategic interdependence inwhich one actor (the sender) aims at persuading another actor (the receiver) of a fact the receiver does not know or is uncertain about. The unobserved fact can be a quality of the sender the receiver would like to know and act upon. Signaling theory has been used to explain individuals’ investments in higher education, advertisement, cultural consumption, aggressive behavior, and decision-making in social dilemmas. In this chapter, we give an overview of how signaling theory can be used to explain trust and trustworthiness in social exchange. After restating the core elements of the theory, we discuss conceptual extensions to the basic framework which have proved useful in explaining trust and trustworthiness in social exchange. In particular, we show how distinguishing between signaling costs and benefits, signals and signs, and the production and display of signals and signs can make signaling theory more broadly applicable in sociological scholarship. We illustrate these conceptual extensions with empirical evidence from laboratory experiments. The chapter concludes with an outlook on future research.